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Operating Rules for Securities Firms Handling Margin Purchases and Short Sales of Securities(2008.07.11) |
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Article 8
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A securities firm shall enter into a margin agreement with, and open a margin account for, a customer before accepting any order from the customer to carry out a margin purchase or short sale of securities.
The margin agreement under the preceding paragraph shall be prepared by the TSEC in conjunction with the GreTai and submitted to the competent authority for ratification.
A put warrant issuer, or a securities firm or bank engaged in structured products business, may, to meet hedging needs, open a margin account with which to sell securities short.
An enterprise exclusively or concurrently engaged in futures proprietary trading (dealing) that is also an equity options market maker may, for its risk mitigation or hedging needs, open a margin account with which to sell securities short.
In the case of a privately placed securities investment trust fund managed by a securities investment trust enterprise ("SITE"), the custodian of the trust fund may apply to open a margin account, for which the outstanding balance of long and short margin positions may not exceed 50 percent of the size of the fund, and which shall be controlled by the TSEC as a segregated account. If that limit is exceeded, the TSEC shall through the securities firm notify the SITE to lower the balance to 50 percent within two business days from the date on which it receives the notice from the securities firm. If the SITE fails to do so within the time limit, the TSEC may instruct the securities firm to dispose of the collateral on the next business day, by the mutatis mutandis application of Article 39, paragraph 3, to the extent required to achieve compliance.
The combined total of the outstanding balance of short margin positions under the preceding paragraph and other sales of borrowed securities [borrowed directly from securities holders or otherwise] may not exceed 50 percent of the size of the fund.
In the case of a discretionary investment account managed by an SITE or a securities investment consulting enterprise (SICE), or of discretionary investment business conducted by a securities broker concurrently operating a SICE, the custodian institution for discretionary investment assets may open a margin account on behalf of its customer, for which the outstanding balance of long and short margin positions may not exceed 50 percent of the net asset value of the discretionary investment account.
The combined total of the outstanding balance of short margin positions under the preceding paragraph and other sales of borrowed securities may not exceed 50 percent of the net asset value of the discretionary investment account.
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